QUARTERLY REPORT. For Quarter ending 31 March 2011 HIGHLIGHTS COMPANY OVERVIEW. Napoleonville Salt Dome

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1 QUARTERLY REPORT For Quarter ending 31 March 2011 Napoleonville Salt Dome Potential for 500 BCF and 3.8 MMBO Balanced portfolio of 13 quality prospects 50 Square Miles of 3D Seismic Historical Production of 188 BCF and 20.2 MMBO. 5,700 leased acres HIGHLIGHTS Caption describing picture or graphic. South Louisiana La Posada Drilling at 13,150ft targeting 10 MMBO/302 BCF Abita Spudding 15 May, targeting 12.3 MMBO & 4.5/9.5BCF Development well D&L#3 encountered 4 gas sands including potential new discovery in S sand. Thibodeaux #1, La Posada (10 MMBO/ 302 BCF) presently at 13,150ft setting casing Abita well, spud date 15 May Completion of $5.4M Rights Issue and $2.3M Fundraising Elimination of $6.5m of working capital debt Energy Prices WTI $ (BBL) Henry Hub $4.50 (MMBTU) Major Shareholders Charles Morgan 19.95% Craig Burton 9.45% Jim Trimble 3.5% COMPANY OVERVIEW ASX Code: GGE Mr Charles Morgan Chairman Share Price: 0.6c Mr Mark Freeman Executive Director Shares 3,117m Mr Stephen Keenihan Director Listed Options 1,115m (1.5c) Mr Allan Boss Director Mkt cap $19m Mr Jim Trimble Director Drill Program Date P50 Oil P50 Gas La Posada 21 Mar MMBO 302 BCF D&L #3 16 April MMBO* 7 BCF* Abita 15 May MMBO BCF * Size of structure to be drained from D&L#2 and D&L#3. Grand Gulf Energy Limited, 1292 Hay Street, West Perth WA 6005 T +61 (0) F +61 (0) E info@grandgulf.net

2 DUGAS & LEBLANC #3 UPDATE NEW GAS SHOW Napoleonville Dugas & Leblanc #3 Well, Assumption Parish, Louisiana, Non Operator 39.5% WI The Dugas & Leblanc #3 well spudded on 16 April 2011 and reached TVD of 8,000ft (TD 8,920ft) on Saturday, 30 April The well passed through 4 gas shows on the mud logs. Three of the shows appear to tie with the M, N and O sands with a further unexpected show in what is a potential new reservoir S sand. The operator is presently attempting to free the drill stem after it became stuck when pulling out of the hole. The Dugas & Leblanc #3 well is updip of the #2 well and has intercepted the M, N, Stray and O sands. When completed production will start at the lowest hydrocarbon saturated sand and as each zone depletes the zone above will be completed. The expectation is that the D&L #3 well will be a gas well with the D&L #2 well recovering the oil in the M Sand. The D&L #2 well is currently producing in the N sand. Once this production depletes the 41ft of net pay in the M sand will be completed for production. The potential oil recoverable from the Dugas & Leblanc field is estimated at 7 BCF and 305,000 BBLS and will be recoverable over the following intervals. Gas (BCF) M Sand 4.15 Stray Sand 0.25 N Sand 1.3 O Sand 1.25 S Sand? Total 6.95 Oil (MBBL) 300 5? 305 In D& &L #2 the N Sand has proven to exhibit strong water drive. However, the dominant drive mechanism in the remaining sands is an unknown variable. The high permeability and porosity of the sands indicate potential flow rates of over 4,000 mcfgd in the D&L #3 well resulting in significant cash flow generation.

3 THIBODEAUX #1 WELL, LA POSADA PROSPECT, LOUISIANA Highlights Thibodeaux #1 rig is on time and budget and running casing at 13,150ft. La Posada prospect is targeting a resource of 10.3 million barrels and 302 BCF Targeting multiple objectives over 2,100 gross feet of potential sand Analogue discoveries include Davy Jones & Flat Rock > 1tcf Analogue production rates estimated at 30 + mmcf/d and 1,400 bc/d Well anticipated to drill to TD in ~110 days The Board is pleased to advise that the Thibodeaux #1 well which spudded on 21 March 2011 is presently setting casing at 13,150ft. The well is presently on time and budget. The Company has a 4.75% working interest in the La Posada Prospect which covers an area of 2,400 acres in Vermilion ParisThibodeaux #1 is being drilled to a total depth of 19,300ft. Analog fields Flat Rock / Davy Jones (200410) Deeper Pool Discoveries On prolific Tigre Lagoon Regional N S Ridge Etouffe S. Turtle Bayou (2000) Analogous structure, timing, depth and deposition 20.8 MMBC & 96 BCF (active) Darcy permeability Bayou Postillion (1970) On trend Large CrisR Fields Analogous structure, timing and deposition 266 BCF & 3.1 MMBC The most likely resource potential being 10.3 MMBBL and 302 BCF gas, with upside potential of up to 40 MMBBL and 1.1 TCF gas. The La Posada Prospect was generated from a proprietary 3D shoot. The prospect is targeting a condensate rich gas pool in a large fault bounded structure, located in a major proven hydrocarbon trend with nearby discoveries in the same objective. The project offers substantial impact and long life resources. The well is targeting multiple objectives with over 2,100 gross feet of potential sand over a 2,000 acre closure with the primary targets being the L CrisR 1st Massive sands (680ft sand of structure) and Secondary targets being the U & M CrisR sands (700ft sand of structure). Operational and Economic Upside Resource Upside: Production rates: Condensate yield: BTU FACTOR: Operating costs: Project costs: Drilling control: Gas markets: Entry Terms: Column height, Condensate yield, number of pays and sand thickness Deliverability & analog sustained rates 30+ mmcf/d and 1,400+ bc/d Higher yields on trend (45 and 75 bc/mmcfg) 1100btu/mcfg SWD on property & access to Intracoastal Canal Pipeline tap on property, Shut in well available for reentry / development sidetrack Offset well located 1,100ft from location drilled and within 3,100ft of TD. Well drilled in 46 days without incident 2.5 miles from Henry Hub central facilities and multiple markets Very favorable with 5% carry to casing point and 10% back in after project payout (APP) prorata adjusted to the working interest. GGE s will have a 4.275% WI APP. Page 2 Grand Gulf Energy Limited 1292 Hay Street, West Perth WA 6005 T +61 (0) F +61 (0) E info@grandgulf.net

4 ABITA PROSPECT ACQUISITION, Non Operator 20%WI (15% after payout) Highlights Well anticipated to spud in 15 May 2011 and take 20 days to drill Acquisition of 20% of Abita prospect Abita prospect is targeting a resource of 1 MMBLS and 4.5 BCFG up to 2.3 MMBLS and 9.4 BCFG. Targeting multiple 7+ objectives over 2,400ft gross interval Extension to 8 MMBO field which is productive from all 7 intervals On 14 April 2011 the Company signed a Participation Agreement to acquire a 20% working interest in the Abita Prospect, operated by Clayton Williams Energy Inc (NASDAQ: CWEI) in Plaquemines Parish, Louisiana. The prospect will be drilled to a total depth of 10,700ft TVD in a normally pressured section with the first objective levels expected at approximately 8,100ft. The most likely resource potential is 1 MMBL and 4.5 BCF gas with upside resource potential of 2.3 MMBL and 9.4 BCF gas. The well is expected to take 20 days to drill and is planned to spud 15 May The Abita Prospect is a multiple objective prospect as an extension to Coquillo Bay Field (produced 8 mmbls & 15 BCFG). The prospect is a down thrown drag feature defined by 3D seismic across a shallow syncline from the main field. The well will be structurally high to wells that produce to the south across the syncline. If successful the well is likely to be dual completed and production rates are estimated to be between bbls/d and 1005,000mcfd depending on the sands producing. It is likely only one well will be required to drain the structure. The Company s share of the initial well costs is estimated at ~US$550,000 (includes entry costs). In a success case the Company s share of completion and facilities costs are a further US$840,000. Due to the well being in a wet location, completion of facilities and commencement of production will take upto 7 months. The entry terms are favourable with the Company paying 20% to earn a 20% working interest and following project payout GGE s working interest will reduce to 15%. The net revenue interest being delivered is 74%. Page 4 Grand Gulf Energy Limited 1292 Hay Street, West Perth WA 6005 T +61 (0) F +61 (0) E info@grandgulf.net

5 $5.4M RIGHTS ISSUE COMPLETED On 14 January 2011 the Company announced a $5.4m rights issue underwritten up to $4.3m. The rights issue and 100% of the shortfall was completed during the. The funds will be used as follows: acquisition and participation in the High Impact (10MMBL / 302 BCF) La Posada prospect with the first well, Thibodeaux #1 well expected to be spudded in February/March 2011; towards seismic interpretation, geological and geophysical work on the Napoleonville prospect; repay working capital loans; and meet the costs of the Entitlements Issue. $2.3M FUNDRAISING COMPLETED In March and April 2011, the Company completed placements totalling $2.3m (before costs)through the issue of 364m shares at 0.5 cents each and 85m shares at 0.6 cents each with one free options attaching listed option for each share issued. ELIMINATION OF DEBT In addition to the completion of the recent entitlements issue the company eliminated over $6.5m of working capital debt with its financiers, Macquarie Bank, Seaspin Pty Ltd and Skye Equity Pty Ltd. $3m of the debt was converted to shares at 0.6c each (with free attaching listed option for every two shares issued) and the balance was repaid in cash. The Company is new well funded to expand its program at Napoleonville and meet dry hole drilling obligations on the Company s very exciting new prospects being drilled at La Posada and Abita. COMPETENT PERSONS STATEMENT: The information in this report has been reviewed and signed off by Mr K.C. Whittemore (Registered Geologist, Texas USA), with over 36 years respective relevant experience within oil and gas sector. This report contains forward looking statements that are subject to risk factors associated with resources businesses. It is believed that the expectations reflected in these statements are reasonable but they may be affected by a variety of variables and changes in underlying assumptions which could cause actual results or trends to differ materially, including but not limited to: price fluctuations, actual demand, currency fluctuations, drilling and production results, reserve estimates, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risks, project delay or advancement, approvals and cost estimates. Page 5 Grand Gulf Energy Limited 1292 Hay Street, West Perth, Western Australia 6005 T +61 (0) F +61 (0) E info@grandgulf.net

6 Appendix 5B Mining exploration entity ly report Appendix 5B Rule 5.3 Mining exploration entity ly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001. Name of entity GRAND GULF ENERGY LIMITED ABN Quarter ended ( current ) MARCH 2011 Consolidated statement of cash flows Cash flows related to operating activities Current $A 000 Year to date $A Receipts from product sales and related debtors Payments for (a) exploration and evaluation (b) development (c) production (d) administration (2,077) (97) (5,065) (773) (281) 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid (282) (330) 1.6 Insurance Pre PaymentRefundable 500 (551) 1.7 Bond 25 (1) Net Operating Cash Flows (1,730) (6,799) Cash flows related to investing activities 1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets (28) (28) 1.9 Proceeds from sale of: (a)prospects (b)equity investments (c)other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other Net investing cash flows 1.13 Total operating and investing cash flows (carried forward) (1,758) (6,827) + See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 1

7 Appendix 5B Mining exploration entity ly report 1.13 Total operating and investing cash flows (brought forward) (1,758) (6,827) Cash flows related to financing activities 1.14 Proceeds from issues of shares, options, etc. 6,683 7, Proceeds received in advance of placement being settled Repayment of over subscriptions 1.16 Proceeds from borrowings 3, Repayment of borrowings (3,646) (3,646) 1.18 Dividends paid 1.19 Other capital raising costs (363) (393) Net financing cash flows 2,674 7,324 Net increase (decrease) in cash held Cash at beginning of /year to date Exchange rate adjustments to item Cash at end of 1,612 1,612 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities Current 1.23 Aggregate amount of payments to the parties included in item 1.2 $A' Aggregate amount of loans to the parties included in item Explanation necessary for an understanding of the transactions Noncash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows The Company settled $3m of debt into equity with the issue of 506m shares at 0.6 cents each and 253m free attaching listed options to financiers. 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest + See chapter 19 for defined terms. Appendix 5B Page 2 30/9/2001

8 Appendix 5B Mining exploration entity ly report Financing facilities available Add notes as necessary for an understanding of the position. Amount available $A'000 Amount used $A' Loan facilities 3.2 Credit standby arrangements Estimated cash outflows for next $A Exploration and evaluation 1, Development Production 4.4 Administration 100 Total 1,550 Reconciliation of cash Reconciliation of cash at the end of the (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. Current $A 000 Previous $A Cash on hand and at bank 1, Deposits at call 5.3 Bank overdraft 5.4 Other (provide details) Total: cash at end of (item 1.22) Changes in interests in mining tenements 1, Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased Tenement reference Nature of interest (note (2)) Interest at beginning of Interest at end of + See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 3

9 Appendix 5B Mining exploration entity ly report Issued and quoted securities at end of current Description includes rate of interest and any redemption or conversion rights together with prices and dates. 7.1 Preference + securities (description) 7.2 Changes during Total number Number quoted Issue price per security (see note 3) (cents) Amount paid up per security (see note 3) (cents) Ordinary securities 2,667,437,225 2,667,437, Changes during (a) Increases through issues (b) Decreases through returns of capital, buybacks Convertible debt securities 506,008,829 1,080,714,198 (description) 7.6 Changes during 506,008,829 1,080,714, Options Unlisted options 45,000,000 13,775,000 6,000,000 1,000,000 40,000,000 75,000,000 Exercise price $0.04 $0.04 $0.005 $0.005 $0.009 $0.009 Expiry date 18 Sep Dec June Nov Mar May 2014 Listed Options 933,361, ,361,522 $ June Issued during 933,361, ,361,552 $ June Exercised during 7.10 Expired during 7.11 Debentures (totals only) 7.12 Unsecured notes (totals only) + See chapter 19 for defined terms. Appendix 5B Page 4 30/9/2001

10 Appendix 5B Mining exploration entity ly report Compliance statement 1 2 This statement has been prepared under accounting policies whichh comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). This statement does give a true and fair view of the matters disclosed. Sign here: (Director/Company secretary) Date: 30/04/2011 Print name:...mark FREEMAN.... Notes The ly report provides a basis for informing the market how the entity s activities have been financed for the past and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. The Nature of interest (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentagee interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2. Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. == = == == == == = + See chapter 19 for defined terms.